Toyota has for decades been a staple of the California car market.
In the second quarter of 2017, the Japanese car company dominated the California vehicle market with new car vehicle registrations just shy of 90,000 vehicles, according to California New Car Dealers Association (CNCDA). Tesla was barely a blip with about 4,300 vehicles new car registrations.
Fast forward to the second quarter of this year (PDF) and it’s a very different picture. Toyota sales have dropped off more than 20,000 from 2017 to 67,482 registrations in the second quarter of 2023 while Tesla has surged to 69,212 new vehicle registrations, an increase of 1,515 percent from Q2 2017.
The Tesla Model Y became the best-seller in California’s new vehicle market, CNCDA said.
That’s called an historic market shift. As California goes, so goes the nation.
“Well Tesla is actually doing very well now nationally,” Thomas Libby, an analyst at S&P Global Mobility, told me in a phone interview.
“To give you a couple of examples in the months of February through June, which is a five month time period. In each one of those months, the Model Y was the number one model in the United States,” Libby said, adding that he’s talking about new retail registrations, which exclude fleet registrations.
Part of Toyota’s challenge is the same challenge that other legacy carmakers have. Tesla has turned the car into a smart gadget on wheels replete with AI and OTA software updates. Frequent updates for Tesla’s Full-Self-Driving (FSD) equipped cars, for example, can result in significant improvements in the car’s ability to deal with certain driving maneuvers.
That’s a paradigm shift that other carmakers are still trying to get a handle on.
Japanese business publications are hyper-aware of these challenges. And aware of the fact that the world’s leading car maker (by output in 2022) has resisted the shift to EVs — for sometimes inscrutable reasons.
“If it fails to make the transition to new energy and software, some experts have warned Toyota could follow the same path as past corporate heavyweights in the mobile phone industry that swiftly tumbled out of the competition after the emergence of Apple’s iPhones,” warned Japan’s Nikkei in a March 2023 article.
Public Citizen has gone so far to campaign against Toyota, claiming its EV efforts are half-hearted and point to the fact that the overwhelming bulk of their output is still gas-based vehicles.
“Over 50% of global car buyers are in the market for an electric vehicle…Toyota must end the production of fossil-fueled vehicles, including hybrid gas-electric cars, to meet climate targets,” Public Citizen said this month. (I asked Toyota to respond to Public Citizen’s comments but did not get a response.)
Toyota’s dearth of EVs
Currently, the only pure EV that the Toyota brand offers in the U.S. is the bZ4X (the Lexus brand offers the RZ).
Edmunds called the well-equipped $50K bz4X it tested not “really getting your money’s worth” and compared it unfavorably to the Ford Mustang Mach-E and Hyundai Ioniq 5, among others. The Toyota EV does not come with technology comparable to Tesla’s FSD.
The lack of pure EV offerings could be attributed to Toyota’s former CEO, Toyoda Akio (now chairman). He has often spoken out about the car industry’s singular focus on EVs, saying electric propulsion shouldn’t be the only option for next-generation vehicles. The hydrogen fuel cell-based Mirai is one example of the company’s alternative offerings — albeit far from a market success in the U.S. (It essentially flopped in California.)
But Toyota’s more immediate, practical problem is competing with Tesla, a company hell bent on becoming the largest auto manufacturer in the world by 2030.
That goal appears to be more and more realistic every year.
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